Kenya’s tea factories are buried under 26.06 billion shillings ($200 million) in debt after a string of loans taken without board approval, backed by inflated collateral and diverted to unintended uses, the national tea regulator said Monday.
A Tea Board of Kenya (TBK) audit presented to parliament last week found systemic violations at the 71 factories managed by the Kenya Tea Development Agency (KTDA), which serves about 700,000 smallholder farmers.
Western Kenya hit hardest
Factories west of the Great Rift Valley — mainly Kericho, Bomet, Nyamira, Kisii and Nandi counties — carried 21.61 billion shillings of the debt as of June 2025. Eastern factories owed only 4.45 billion shillings.
The audit flagged 10.36 billion shillings in inter-factory loans arranged by KTDA headquarters without local board minutes or repayment rules. Cash-strapped factories have missed one-year deadlines, prompting KTDA to scrap the programme last month and push factories toward commercial banks.
Inflated collateral and misused funds
Regulators said 12.8 billion shillings in commodity loans meant to fund October 2024 farmer bonuses were secured with sharply overvalued tea stocks — especially in the west — and spent instead on daily operations.
Another 2.59 billion shillings in asset-backed loans saw factories exceed approved limits and pay inflated prices for equipment. Machinery delivered to Kambaa and Sanganyi factories, for instance, cost far more than identical units elsewhere.
Three factories — Kebirigo, Ragati and Chinga — borrowed 300 million shillings for capital projects such as withering-bay expansions but spent the money on unrelated items.
The government also owes KTDA 4.67 billion shillings in unpaid fertilizer subsidy refunds, worsening the cash crunch.
Prices crash in the west
The debt crisis has deepened pain for western growers. Mombasa auction prices for western tea fell 16.3% to an average 226.17 shillings per kilogram in the first nine months of 2025, compared with 270.11 shillings a year earlier. Eastern tea dropped just 2% to 379.96 shillings per kilogram, fueling protests over low bonuses.
Regulator demands action
The Tea Board called for an immediate forensic audit of all KTDA loans since July 2021, physical verification of assets bought with borrowed funds and a ban on new debt to pay year-end bonuses.
“Future farmer payments must be based on actual earnings and real cash, not borrowings propped up by overvalued stocks,” the board said.
KTDA has not commented on the findings.
Kenya is one of the world’s largest tea exporters, earning roughly $1.3 billion annually.
